Interest & Penalty Tax

Interest and penalty tax play an integral role in taxation administration. Interest is applied as a means of encouraging taxpayers to meet their obligations on time, to offset the opportunity cost to government of not having the use of the principal tax sum for the period that it remains unpaid, and to provide equity to all taxpayers. Penalty tax is applied to ensure timely payments and compliance with state tax legislation.

The interest rate comprises:

  • a market rate; and in respect of defaults
  • an additional 8.00% per annum.

The amount of penalty tax is:

  • 75% of the amount of tax unpaid where the tax default was deliberate; or
  • 25% of the amount of tax unpaid in any other case.

Interest and penalty tax may be adjusted or remitted in certain circumstances. (See Revenue Ruling TAA001 for further details.)

The following interest rate table shows the effective interest rate for refunds and tax defaults since the commencement of the Taxation Administration Act 1996.

Period Refunds Defaults
From 1 July 20162.01%10.01%
1 July 2015 to 30 June 2016 2.15% 10.15%
1 July 2014 to 30 June 2015 2.69% 10.69%
1 July 2013 to 30 June 2014 2.82% 10.82%
1 July 2012 to 30 June 2013 3.66% 11.66%
1 July 2011 to 30 June 2012 5.00% 13.00%
1 July 2010 to 30 June 2011 4.80% 12.80%
1 July 2009 to 30 June 2010 3.13% 11.13%
1 July 2008 to 30 June 2009 7.75% 15.75%
1 July 2007 to 30 June 2008 6.37% 14.37%
1 July 2006 to 30 June 2007 5.87% 13.87%
7 July 2005 to 30 June 2006 5.68% 13.68%
8 July 2004 to 6 July 2005 5.51% 13.51%
1 July 2001 to 7 July 2004 4.89% 12.89%
1 July 2000 to 30 June 2001 5.95% 13.95%
1 July 1999 to 30 June 2000 4.80% 12.80%
1 January 1999 to 30 June 1999 8.80% 16.80%
1 July 1998 to 31 December 1998 8.80% 16.80%
1 January 1998 to 30 June 1998 8.80% 16.80%
1 July 1997 to 31 December 1997 9.80% 17.80%
1 January 1997 to 30 June 1997 10.50% 18.50%